City, county report stagnant sales tax revenues

In July – the first month of the fiscal year for both the state and the city of Springfield – the state collected $156.4 million in sales-and-use taxes, a 6.4 percent increase compared to a year ago.

On the year, Missouri has budgeted 2.8 percent general revenue growth, making it one of only 20 states not facing a shortfall in fiscal 2009, according to a National Conference of State Legislatures survey.

The situation is not so rosy for local government, however.

Under budgets

Greene County has logged about $15 million in 2008 sales tax revenue through August, about even with the first seven months of 2007 but below the 3 percent increase the county budgeted to collect.

The weak revenue is a continuation of a trend that began in late 2007, according to county Budget Officer Jeff Reinold. Revenues in seven of the last 12 months were down compared to the same months the prior year, Reinold noted, and the county is down 1.7 percent in that period.

Reinold said that beyond the impact of higher costs for gas and food, there could be several reasons for the drop.

“Our housing industry is at the lowest level for building permits (in Greene County) since 1982,” he said. “People aren’t spending money, and they’re not making those major purchases.”

The trend is not so drastic in Springfield, where revenues for July were up about 1.3 percent from last year.

While it may seem like a positive start for the city, it’s well under budget. For the city to meet its current goal, it will have to see an increase of nearly 5 percent for the year, due in large part to June revenues that were down more than 18 percent.

“We budgeted 3 percent growth for the fiscal year that ended in June, and we didn’t achieve that, so we carried that projection through to this year,” said city Finance Director Mary Mannix Decker. “But when we added in June 2008 … it turns out to be about 5 percent growth that we’ve based the (fiscal 2009) figures on.”

The August number was better for the city – about $2.1 million, up 50 percent from last year, but the increase is primarily due to one of the city’s largest retailers paying a month early. State law prohibits cities from disclosing actual sales tax receipts of local businesses.

Decker did not have much good news about the future for sales tax revenue, either. While earlier predictions had said consumer spending – and, therefore, sales taxes – should increase by early in the 2009 calendar year, Decker said analysts are now looking for a slower rebound.

“The analysts that I’ve listened to and been to conferences with have talked about some possible recovery in the stock market toward December or early next year, and that’s a leading indicator – spending usually follows after that,” she said. “We were originally hoping for recovery in the last half of our fiscal year, but that may be delayed.”

Decker added that the city also is concerned about the impact of this winter’s heating prices, as heating oil and natural gas tend to follow the same general pricing patterns as other petroleum products.

The county’s sales tax numbers are even more pressing at this time of year, when the budget office begins preliminary work on the 2009 budget. Reinold said it’s still too early to predict the impact of the lower numbers.

“I would like to have a couple more months of data,” he said. “The August number will help in making a decision, but it’s also traditionally the lowest month of the year. Even if we have a great month, it’s not enough money to make a big change one way or another.”

The city, meanwhile, is only one month into its new year, so determining the impact is difficult, Interim City Manager Evelyn Honea said.

“We’re waiting until we get … September numbers before we even begin considering what the impact could be,” she said.

But if last year’s sales tax shortage is any indication of what could happen this year, missing the revenue mark by any significant amount could mean a hiring freeze or lack of pay raises for employees.

Decker also has noted in previous discussions that the city maintains a 10 percent reserve fund to cover budget shortfalls. The city last dipped into the reserve following the January 2007 ice storm.